Global equity markets started the week on weaker note when China’s equity market opened almost 8% lower on its first trading day after a break from the festive holidays.  Markets did, however, manage to claw higher after concerns surrounding the coronavirus eased slightly. Sentiment further improved after China announced that it would be reducing the tariffs on its US imports amidst concerns that the global supply chain would be disrupted.  

 

In the news

  • China’s domestic equity market tumbled on its 1st day of trading post the Chinese New Year holidays, before improving marginally towards the end of the week.
    • The broader Shanghai Composite Index ended the week 3.2% lower in MYR terms as concerns surrounding the coronavirus outbreak continue to loom over global markets.
    • The People’s Bank of China was quick to step-in to support the market by injecting financial stimulus into the financial system. RMB 1.2 trillion was injected into the banking sector on last week.
  • Market sentiment improved after China announced that it would be reducing its import tariffs by 50% on USD 75 billion of imports from the US.  Tariff cuts are expected to start this week – on 14th February.
  • While the domestic China equity market slid lower, the China companies listed on the Stock Exchange of Hong Kong ended the week on stronger, as seen in the 5.7% gain recorded by the Hang Seng China Enterprises Index.
  • The stronger performance of the HSCEI Index also resulted in a 8.1% gain for the 0832EA (TradePlus HSCEI Daily (2x) Leveraged Tracker) last week.
  • Supply chain disruptions are expected to continue as many factories in China are anticipated to remain shut on the back of the virus concerns.
  • The US S&P500 Index continued to climb higher, with technology stocks stealing the limelight.
    • Twitter Inc saw its price soar after announcing strong number of users, and revenues. 
    • Total revenues for 2019 were reported at USD3.5 billion, and a 20% hike in YoY “monetised active daily users” to 152 million.
    • Tesla Inc also saw its share price spike to above USD900 over the week, before moving back to the USD700 level.
  • The stronger performance of the technology stocks propelled the 0830EA (TradePlus NYSE FANG+ Daily (2x) Leveraged Tracker) 10.9% higher over the week, bringing its year-to-date returns to an impressive 26.5%.

 

In other economic news

  • China’s service PMI reading slips to 51.8 in January from 52.5 in December.
  • US job data exceeds expectation.
    • A total of 225,000 jobs were reportedly added, exceeding 2019’s average of 175,000.
    • Nevertheless, unemployment rates rose from 3.5% to 3.6%.  The increase was said to be due to the rise in number of job seekers moving back into the job market.
  • UK sees an improvement in its manufacturing PMI, rising from 47.5 in December to 50.0 in January. Sentiment has improved now that the country is seen to be on more stable political footing.
  • Europe’s economic health is in focus after Germany, the largest economic contributor to the bloc, reported drastic weakness in data.
    • Germany saw its manufacturing order fall by 2.1%, and
    • industrial production fell 3.5% in December, reversing the 1.2% increase in November.

 

What to look out for ahead?

  • The development of the coronavirus is expected to remain a headline grabber for now. 
  • Market volatility is expected to continue in the near-term, putting forth opportunities to hedge market exposure through the physically gold-backed 0828EA (TradePlus Shariah Gold Tracker), or the 0831EA (TradePlus NYSE FANG+ Daily (-1x) Inverse Tracker), and 0833EA (TradePlus HSCEI Daily (-1x) Inverse Tracker).
  • We can expect more economic data to flow out from China as it looks to release its inflation numbers, together with CPI, and PPI numbers this week.
  • The US will also be announcing its inflation numbers later this week.
  • EU finance ministers are expected to provide more clarity this month on their decision for a more “growth-friendly” fiscal policy given the growth concerns.

 

A look at the performance of the TradePlus ETFs, and major global indices

 

ETF Performance

 

Index Performance

 

 

Learn more about TradePlus ETFs

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